I paid 25c for all of this food....
4 boxes of crackers
4 packages of cookies
2 boxes of cinnabon bars
1 hotwheel
Had to throw the hotwheel in just cause I had a $1 left to "spend" from my freebie stuff! How did I do it???
Albertson's...

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I just updated the “our progress” section… hoping to do this on the 1st of every month.

Looks like in the last 2 months of being focused, we were able to eliminate $2,328.62 in debt, which is an average so far of $1,164.31 per month. With an average of approximately $1,000 per month of debt payoff, it’ll take us approximately 43 months to get rid of auto loans, credit cards and taxes.

That’s entirely TOO LONG. We’ll keep plugging away at finding any money in any way we can to pay off this stuff. We want it done by Christmas 2010.

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Ok – this is a part of the getting debt free that isn’t an issue for us. We’ve had a budget for a few years and have lived by our budget successfully. Budgets are not something that are static, they are dynamic and fluid.

However, ours has been WAY too fluid the past couple of years as evidenced by our debt. We’ve also never had the goal to actually live debt free – our focus had just been to … well whatever … living debt free is what it should have been. We were incorrectly focused and not biblically aligned. We are changing that now.

I keep a bi-weekly budget as opposed to a monthly budget. I have it drafted out in a spreadsheet along with formula’s etc. I just completed all of 2010’s budget – putting bills where they are due, income as it’s expected, etc. I’m a bit of an accounting geek (just a bit, not too bad) so I enjoy this process.

However, most people do not like this process. I recommend heading over to Dave’s site and checking out his forms. Get yourself a budget written on paper, this is a huge first step. Before you can pay off any debt, you must have a budget and you must be current on all of your obligations. Dave has recommendations on how to get there and what to do if you can’t meet all of your monthly obligations. Please visit him for his advice, it’s sound and will make you so incredibly healthy financially you’ll be jumping for joy.

Our budget is completed and low and behold, on paper it looks like we are running a negative every month. Hum. I don’t know what’s been keeping us afloat (we haven’t been using the cards for almost a year) as we’ve been meeting all of our obligations just fine. We did recently purchase a home which increased our monthly housing expenses (ok, it doubled it) and that’s about the amount we are showing negative.

So… now the game is on to figure out how much we can reduce our monthly expenses.

Here is our current monthly budget… I’ll review as we reduce expenses:

Tithe – 10% (I’m not prepared to reveal our income so this will have to suffice!)

Mortgage – $1304.54

Freedom Fund (annual expenses, repairs, medical, etc) – $180.00

Electricity – $75.00

W/S/G – $75.00

Gas – $75.00

Phones – $225.00

Internet – $50.00

Groceries – $600.00

Car Payment – $314.54

Gas/oil – $300.00

Health Insurance – $242.27

Toiletries/pets – $100.00

Cosmetics – $10.00

Hair care – $50.00

Tuition – $935.00

School supplies – $10.00

CC #1 – $65.00

CC #2 – $70.00

CC #3 – $81.00

CC #4 – $87.00

CC #5 – $116.00

CC #6 – $125.00

Gas card – $20.00

Macy’s – $70.00

ISTC – $100.00

Personal loan – $151.00

Student loan #1 – on forbearance

Student loan #2 – on forbearance

My goal is to reduce this budget by at least $300.00/month over the next 6 months.

First thing we are attacking is groceries/toiletries/pets – current budget of $700/month. I would like to bring this entire expense down to $600/month immediately.

Second thing we are attacking is internet – looking to find a less expensive broadband option. We don’t have cable TV or satellite TV or a landline so we don’t get a reduced cost for our internet. This is in process. I’m hoping to save at least $20/month on this service.

Third thing we are attacking is our cell phone bill. However, there isn’t much room on this one… we have 3 lines (mine, his, house/kids). 2 lines have internet access on our phones – we work in real estate and use this frequently throughout the day for MLS access, email communication with our clients/prospects, etc. The house/kids line is $10/month and that will remain – we want phone access for the kids when we are not home with them. So, I think the only thing we’ll be able to change on this is phone insurance that we pay monthly – $2/month I believe. That will be gone immediately.

Those 3 items total $132.00/month of unnecessary spending. Just $168.00 to go!

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I supposed I should have mentioned this earlier… we completed Dave’s baby step #1 which is to put $1,000 aside as our temporary “baby emergency fund” while we are snowballing our debt. We are keeping it in our local credit union savings account – interest is not important at this point. I want the money accessible but no so easily accessible that we can squander it. It’s current location requires us to physically go into the bank to withdraw it.

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We just purchased a new to us home (closed May 2009).We have been renting for the past 3 years from family and finally decided that it was time to get into our own home again.There were several reasons for doing so: first, interest rates are excellent and we are able to afford payments on a home that suited the family beautifully.Secondly, we qualified for the $8,000 IRS tax credit.We bought the home paying only $500 to get in.We used a zero down RD loan (USDA) and got a 4.75% 30 year fixed on our loan.We paid $206,000 for our house and our loan is $214,000 (sorry, just paused for a big morning hug from my 6yo).Our loan is higher because all of the closing costs were wrapped into the loan so that our initial cash outlay was minimal.

Was this wise?According to our new idea of “debt is not an option”, no it wasn’t.I can justify the reasons why we purchased the new home till I’m blue in the face.We definitely felt led by God to go through with this purchase.It was a very fast process and a month prior to closing, we weren’t even looking for a home.The Lord very often moves fast with us in our lives and through confirmations from well respected friends and family, we moved forward with this purchase.

Here’s the down side, we were paying only $600/month in our previous residence.My family was “eating” the other $700/month (in other words, they were subsidizing our living for us).It was agreed upon from the beginning and all parties were amenable to the entire thing.We all knew it was a short term (2-3 year) situation and it was considered part of a “salary package” when we decided to be a part of the family business, not a hand out or lifestyle subsidy.

So, by purchasing our home, our mortgage payment goes to the full $1300/month which in essence means we are taking an $8200/year pay cut by moving into the house.That’s no small number, but we walked into it with eyes wide open.We are resourceful and knew that should we need more income, we know many ways to add a couple hundred dollars each month to our income.The only reason we need more income is because we’ve gotten ourselves into stupid debt – which is the point of this whole process, to get out of it!

So there it is: our new home, our mortgage balance and our monthly payment.

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I’m an optimist… but even optimists fight off nagging doubts once in a while. I’m fighting mine off right this very minute. I am definitely gung ho about following Dave Ramsey, 100% to a T, even to the point of being fully mortgage debt free.

My nagging doubt? The fact that we have more student loan debt than anyone on earth (ok not literally, but it sure feels like it) and the fact that we are going to have to do baby step #2 in 2 stages… the first by paying off credit cards and auto loans, then splitting the step in half and saving a bigger emergency fund, then paying off the student loans and personal loan we have. Yes, our student loans combined are approximately double our annual salary. The personal loan we have is just slightly under our current annual salary.

I know we can pay it all, it will take time, I just want to make sure we are doing it right. For now, we are putting $2,000 into our emergency fund. $1,000 just makes me nervous, especially with questionable appliances, a questionable car and some potential medical expenses coming up (suspect braces for at least 2 kids, suspected glasses for another, etc).

Anyway, just about done with baby step #1 (saving the initial emergency fund – which I upped to $2,000 from Dave’s recommended $1,000). Can not WAIT to get into paying off the debt again (yes, we’ve been credit/auto debt free before).

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Some readers have commented that using your credit cards is an option for an emergency fund. Frankly, that’s ridiculous. If your goal is to be debt free, why would you keep using the credit cards? Sure, the idea of paying them off in full every month is great, but obviously if you are trying to get out of debt, you haven’t been paying them off every month! Get real people! Get that emergency fund established so you never have to use your credit cards again.

Remember, it’s a mind set. You must make up your mind that debt is not an option. This means that using your credit cards is not an option. When you are recovering from carrying balances (aka, getting yourself out of debt) you have to stay out of temptation completely. Become a “card carrying member” of the cash is king world!